Africa saw a more than fivefold increase in blockchain startups’ funding in 2022, driven by South Africa and Seychelles, the two nations that have attracted the highest venture capital investment on the continent, according to a new blockchain research report seen by NODO News.

Startups in Africa employing blockchain technologies have raised a total of $474 million in 2022, compared to $89.6 million a year earlier, shows the Africa Blockchain Report compiled by Swiss venture capital company CV VC and South Africa’s Standard Bank.

By country, Seychelles ranks at the top, attracting the most funding at $208 million or the largest slice of 44% of the total. South Africa comes second with $176.7 million. Liberia, Kenya, and Nigeria close the top five list at a funding of $37.5 million, $25.8 million, and $16 million respectively, according to the report. Continentally, Nigeria is the leading country in terms of the number of blockchain startups funded in 2022 at 9, followed by South Africa (6), Seychelles (6), Kenya (4), and Cameroon (1).

*(Liberia received its first blockchain funding in 2022/ The Africa Blockchain Report 2022*)

The report added: “Venture rounds accounted for the vast majority of funds raised in Africa, obtaining 91.4% of the funding from 12 deals, up from 43% from six deals in 2021.” The report covers venture fundings of above $100,000 and in publicly disclosed verifiable deals, it says.

Crypto Exchanges Attract the Most Funding

Custody and exchanges was the highest performing industry category in 2022, raising $250 million, and accounting for more than 50% of all blockchain funding in Africa, the report shows. “The significant increase in funding for this sector demonstrates the growing demand for cryptocurrency trading in Africa, as well as the recognition of the importance of secure storage solutions,” it says.

This was followed by fintech ($115.3 million), infrastructure and development ($67.8 million), NFTs, gaming and metaverse ($32.2 million), with decentralized finance (DeFi) closing the top five categories at $3.9 million.

Blockchain venture funding, as a percentage of all venture funding, is on the rise globally, growing by 6.5%. It achieved a record 15% share of all sector-agnostic venture financing in Africa. This is more than double the global average, highlighting the continent’s continued emergence as a vital blockchain-startup investment destination.

*(Blockchain venture funding by region. Numbers in circle represent the share of the total funding value/ The Africa Blockchain Report 2022)*

“It is true that Africa is not only the ultimate crypto continent but also one of the world’s fastest blockchain technology-adopting and developing regions,” Gideon Greaves, the Managing Director of CV VC Africa, said in a press statement.

When combining the sharp increase in blockchain funding with the fact that Africa had the smallest increase in blockchain deals, the annual median deal size has increased significantly, indicating that businesses are raising more funding and investors are gaining confidence.

The report, Greaves says, reveals the undeniable transformative potential of the technology for business operations. And as investors continue to express confidence in the blockchain industry’s sustainability and prospects, the anticipation is for further growth and investment in Africa.

The Rise of Blockchain in Africa

Ian Putter, the head of blockchain CoE&CA training at Standard Bank Group, the largest African bank by assets, affirms that the surge in the utility of blockchain technology shows no signs of slowing down.

“We are embracing the technology to bring about transformation in a regulated and inclusive manner. Blockchain is fundamental to the next iteration of the Internet – Web3,” Putter said in a press statement. “We firmly believe that Web3 will be the economy of the future and appreciate the function that blockchain technology plays in getting everyone there.”

*(Crypto exchanges attracted the highest funding/ Africa Blockchain Report 2022)*

With one of the youngest and most populous demographics in the world, Africa stands at a unique position to capitalize on its current circumstances to drive innovation through blockchain adoption.

Sectors such as financial infrastructure, personal identification, record-keeping, and access to financial independence, present a perfect environment for blockchain technology to flourish and tackle real-world issues in the continent.

With the potential to create entirely new business models, Greaves said, the African blockchain industry is understandably experiencing rapid growth, with investors readily embracing it.

The continent, he indicates, exhibits a magnetic collaborative environment among developers and organizations in the blockchain space. And this supportive ecosystem drives the industry.

*(Gideon Greaves, the managing director of CV VC Africa / Photo by NODO News)*

“But despite the rapid growth and progress that the continent continues to make, a significant knowledge gap still needs to be addressed,” Greaves says. “Having had the opportunity to engage with legacy companies across the continent, it is clear that most C-level staff don’t know what blockchain does and why they should pay attention to it.”

While the African blockchain ecosystem continues to thrive and crypto adoption rates soar, there remains a need for comprehensive, up-to-date information on blockchain-related activities and regulatory developments in the region.

“This will not only drive innovation and progress but also attract even more investors and entrepreneurs to the continent,” Greaves notes.

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